Superb news out of domestic uranium developer, Uranium Energy recently, as the company wrapped up their first full year of production with impressive operational results out of the Production Area-1 (PA-1), Palangana in-situ recovery (ISR) Project in South Texas, including sale of nearly half the year’s production, generating revenues of $6.2M. In addition, with new production infrastructure coming online via PA’s-2, 3, 4, and 5, UEC stands poised to harvest substantial ore-quality mineralization from the some 6,200-acre site, refining it all their Hobson Processing Facility (only 100 miles north of the fields).
Let’s take a look at the highlights:
- First full year of production brought in some 236k lbs of U3O8 from PA-1 (an an average cash cost/pound of around $16), selling some 120k lbs at an average price of $52/lb, generating some $6.2M in revenue
- Another 116k lbs (market value of approximately $6M) put into inventory
- $16.9M in cash (in addition to the $6M in U3O8 inventory as of Jan 1, 2012) with zero debt
- PA-2 wellfield drilling/casing was brisk throughout Q1, as most were completed and the initial core leach data offered solid recovery yield values
- PA-2 slated to begin production later this month, somewhere around the end of March
- PA-3 TCEQ (Texas Commission on Environmental Quality) Production Area Authorization application validated as administratively complete and submitted in Q1 (currently under review), injection/production wells slated to coincide with pending TCEQ application and the company looks to get going in early summer as core leach data mirrors PA-2 quality
- PA-4 and 5 are also being added to the Palangana production envelope, with drilling in Q1 finished by a four-rig team targeting nascent, underexplored areas; quantification of three major mineralization trends achieved via 66 holes showing ore-quality concentrations in the 300-600 foot range, with more drilling/coring being planned
Palangana is turning out to be a real U3O8 powerhouse for UEC, as the Q1 sales alone brought in $3.1M in revenues and cash costs for production have clearly stabilized around $16-$17 per pound. As PA-2 ramps up production here we will see even better numbers coming out of UEC and shareholders will be eager to see how the emerging areas come along production-wise.
With production thus far coming entirely from PA-1, and the three-phase startup process having proceeded apace of expectations, targeting depths of approximately 450 feet, UEC has set an impressive completion pace for productivity (Phase I wellfield started production in Nov 2010, Phase II in April 2011, and Phase III in Oct). The company addressed performance variation by sinking new wells, stabilizing overall production during all the phases, and, in addition to the new injection and production wells, UEC recompleted extant infrastructure, both of which are going on at Phases II and III since January (with this work currently still underway).
As PA-3 is readied to be brought through development in the second half of this year, PA’s 4 and 5 should be shaping up nicely. This occurs against a larger backdrop of activity at UEC, including:
- Significant traction at the nearby Goliad ISR Project in South Texas, as advanced development was initiated as the last state authorization (Radioactive Material License) was acquired
- The agreement to secure key ISR territory in Paraguay via the all-stock acquisition of Cue Resources Ltd.
- The some 32.8k foot drilling program started last year in November at the Coronel Oviedo Uranium Project in Paraguay is proceeding apace
- Acquisition of a 100% interest in the (inferred resource of 5.5M lbs U3O8) Workman Creek Project in Arizona
If China is slowing down, you wouldn’t know it from the movement of broad indicators like iron and copper. With oil moving upwards ahead of increased global demand and tightening supplies, amid continued tension over Iran putting a premium on very barrel coming out of the Middle East, U3O8 and domestic nuclear infrastructure grow increasingly attractive. Moreover, with over 60 reactors under construction in 14 countries worldwide, the growing global market for nuclear is steady. The U.S. is pushing plant life extension programs out well into the future, including upgrades and domestic demand for energy is even putting major plans for new capability on the table. Russia continues to be a serious vector as well, while surging demand from Asian markets generates a swathe of new reactors.
For more information on this aggressive domestic uranium producer, please visit the Uranium Energy Corp. website at: www.UraniumEnergy.com
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